Legal Definitions - free of all average

FREE OF ALL AVERAGE

Free of all average is a term used in maritime law to describe an insurance policy that covers only total loss. It is abbreviated as FAA.

An example of free of all average insurance would be a policy that covers a ship only if it sinks or is completely destroyed. If the ship is damaged but not completely destroyed, the insurance policy would not cover the cost of repairs.

Another example would be a policy that covers a cargo only if it is lost at sea or completely destroyed. If the cargo is damaged but still salvageable, the insurance policy would not cover the cost of repairs.

The examples illustrate that free of all average insurance policies only cover total loss. This means that if the insured item is damaged but not completely destroyed, the policy will not cover the cost of repairs. This type of insurance is often used for high-risk items such as ships and cargo that are more likely to suffer total loss than partial damage.